Getting it together:Institutional arrangments for coordination and stakeholder engagement in climate financeSmita Nakhooda and Vyoma Jha
October 2014
Shaping policy for development odi.org
Getting it together:
Institutional arrangements for coordination and
stakeholder engagement in climate finance
Smita Nakhooda and Vyoma Jha
There is no single, perfect institutional arrangement to mobilise and deliver
climate finance, and efforts to strengthen coordination around climate finance
must contend with messy domestic landscapes, with new sets of policies
needed for diverse sets of actors.
Ministries of environment, finance and non-governmental actors, all have
vital roles to play: the key is to create incentives and accountability for these
institutions to work together.
Institutional arrangements for climate finance lie on a continuum wherein
they ‘dock’ international or external climate finance in the national system, or
‘mainstream’ climate considerations into core policy and associated
investment decisions and financial frameworks. Different countries lie at
different stages along this coordination continuum, and most countries
exhibit characteristics of both of these simplified types.
Operational coordination may be complex even when driven or mandated at
the highest level of government.
Changes in the structure of institutional arrangements do not necessarily
change behaviour. It is the incentives for coordination that matter. Scale of
finance available can shape these incentives, and determine whether the
arrangements support ‘docking’ or ‘mainstreaming’ (or both).
October 2014
Acknowledgements
This paper has benefitted from peer review comments from Navroz K. Dubash of
CPR, Marcela Jaramillo of E3G, Jerome Van Rooij of the Africa Climate Finance
Hub, and Aidy Halimanjaya. Inputs were also received from Xing Fu-Bertaux,
Alexander Froede and Lars Andersen of GIZ. Financial support for this program of
work was provided by the German Ministry of Economic Development and
Cooperation (BMZ) through GIZ. All conclusions remain the sole responsibility of
the authors. This paper may be updated to respond to feedback received.
The views presented in this paper do not necessarily represent the views of ODI or
CPR. In particular, no responsibility for the opinions here expressed should be
attributed to the Government of the Federal Republic of Germany or GIZ.
Getting it together: 1
Table of contents
Acknowledgements ii
Abbreviations 2
1 Introduction 3
2 Dynamics of institutional coordination: lessons from the literature 4
3 Institutional arrangements: key findings from the case-studies 6
4 Lessons learned: implications for ownership and ways forward 15
References 19
Annex I: Methodology for country case studies 20
Getting it together: 2
Abbreviations
AF Adaptation Fund
BAPPENAS State Ministry of National Development Planning (Indonesia) BIS Department for Business, Innovation and Skills (UK)
CCFU Climate Change Finance Unit (India) CDM Clean Development Mechanism
CIFOR Centre for International Forestry Research (Indonesia) CIF Climate Investment Funds
COP Conference of Parties CPI Climate Policy Initiative (Indonesia) CSO Civil-society organisation
CTF Clean Technology Fund DECC Department of Energy and Climate Change (UK)
DEFRA Department of Environment, Food and Rural Affairs (UK) DKN National Forestry Council (Indonesia)
DNP National Planning Department (Colombia) DNPI National Council on Climate Change (Indonesia) EU European Union FIP Forest Investment Program GCF Green Climate Fund
GEF Global Environment Facility
GFATM Global Fund for Aids Tuberculosis and Malaria
GHG Greenhouse gas
GIB Green Investment Bank (UK)
GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit ICCTF Indonesian Climate Change Trust Fund (Indonesia) ICRAF World Agroforestry Centre (Indonesia) IIMSCC Interim Inter-Ministerial Secretariat for Climate Change (Zambia ) IPPR Institute for Public Policy Research (UK) IREDA Indian Renewable Energy Development Agency (India) MADS Ministry of Environment and Sustainable Development (Colombia)
MFA Ministry of Foreign Affairs (Colombia) MLNREP Ministry of Lands, Natural Resources and Environmental Protection (Zambia)
MoEF Ministry of Environment and Forests (India) MoF Ministry of Finance (India) NABARD National Bank for Agriculture and Rural Development (India) NAPCC National Action Plan on Climate Change (India) NBFC Non-banking financial company (India) NCCD National Climate Change and Development Council (Zambia) NCEF National Clean Energy Fund (India)
NGO Non-governmental organisation NPCC National Policy on Climate Change (Zambia)
PPCR Pilot Programme on Climate Resilience RAD GRK Regional emissions reduction guidelines (Indonesia) RAN API National adaptation guidelines (Indonesia) RAN GRK National emissions reduction guidelines (Indonesia) REDD Reducing emissions from deforestation and forest degradation
SIDBI Small Industries Development Bank of India
SISCLIMA National System of Climate Change (Colombia) SME Small and medium-sized enterprises
UK United Kingdom
UKP4 REDD task force (Indonesia) UNDP United Nations Development Programme
WRI World Resources Institute (Indonesia) WWF World Wildlife Fund (Indonesia) ZCCN Zambian Climate Change Network (Zambia) ZIGGS Zambian Inclusive Green Growth Strategy (Zambia)
Getting it together: 3
1 Introduction
Adapting to and mitigating climate change will affect most sectors of national
economies. Addressing this problem will require us to rethink our future investment
trajectories across the board. Many government agencies and institutions are
involved, as well as businesses, civil society, local institutions and communities.
Each one of these has its own particular mandates, interests and priorities.
Many countries have begun to establish institutional arrangements to direct public
finance and investment towards solutions to climate change. These arrangements
have evolved over time, responding to changing demands and circumstances, and
generally include roles for many stakeholders. International institutions seeking to
support countries to achieve climate-compatible development have stressed the
need to engage diverse national stakeholders and support coordination. Doing this
well, however, is easier said than done.
This paper analyses the arrangements that have emerged in Colombia, India,
Indonesia, the United Kingdom (UK) and Zambia to draw lessons on the conditions
that facilitate or impede coordination across institutions and actors. It seeks to
deepen our understanding of what drives existing arrangements for coordination
around climate change-related policy and climate finance. These insights may be
relevant for international institutions as they consider how to engage with national
stakeholders and for countries as they consider arrangements for strengthening their
interactions with international funds, including the new Green Climate Fund
(GCF). The paper may be updated to respond to further feedback received.
Following an introduction to the methodology used for the underlying country
studies, Section 2 distils key insights from the literature and theory on institutional
coordination for understanding the institutional arrangements that have emerged in
the five case-study countries. Section 3 analyses these arrangements and their
modalities, seeking to highlight lessons and good practices. Section 4 concludes
with core functions of coordinating institutions, and recommendations for both
national actors seeking to strengthen domestic arrangements for climate finance and
international actors that may support such endeavours.
Methodology and approach
This paper is based on case studies of institutional arrangements in Colombia
(Jaramillo 2014), India (Jha 2014), Indonesia (Maulidia and Halimanjaya 2014), the
UK (Flanagan 2014) and Zambia (van Rooij 2014) that respond to climate change
and direct finance to policy solutions. Colombia, India, Indonesia, the UK and
Zambia represent a diverse group of countries that differ markedly in terms of their
economic circumstances and the way in which climate change will affect their
economies. There are also significant differences across the five countries in the
extent to which there is a policy or legislative framework for action on climate
change, and in their ability to access domestic and international finance (public,
private and hybrid) to support their national responses. Their diverse approaches on
finance also reflect their particular financial circumstances. However, they do have
Getting it together: 4
one thing in common: all of these countries have multiple institutions involved in
directing finance into climate-compatible solutions.
These case studies used a common three part analytical framework that:
puts the domestic climate response in context;
maps the institutions and actors that have been involved in efforts to
invest in solutions to climate change; and
reflects on the modalities of engagement, and analyses their
implications.
Annex I summarises the approach used for all five case studies. The four studies of
developing countries also included an analysis of lessons from efforts to access
international climate funds and health funds, in order to offer insights into how
international institutions are interacting with domestic efforts to invest in solutions
to climate change. The country studies were based on a review of available
literature and studies on the national response to climate change and engagements
with finance. These were complemented by interviews with key stakeholders,
including government, civil society and private sector representatives. The studies
then reflected on the implications of these arrangements, and options that would
strengthen practice.
2 Dynamics of institutional coordination: lessons from the literature
In most countries (developed and developing alike), climate change has primarily
been the purview of ministries of environment. The political influence of
environment ministries varies across countries, but is often perceived to be
relatively modest. Growing recognition of climate change as an economic problem
that requires a reshaping of policy and investment priorities across the board, has
prompted interest in different institutional arrangements to mount a response to
climate change and to direct the finance needed for such a response. Many studies
on climate change and finance conclude that better coordination across agencies
and stakeholders in country is essential if investment is really to be directed away
from ‘business as usual’ and towards climate-compatible development, and if
associated finance is to be used well (Ballesteros et al., 2010, Bird et al., 2013,
Polycarp et al., 2013, Indonesian Ministry of Finance and CPI 2014).
Getting it together: 5
Coordination refers to the need to ensure that the departments and organisations –
public and private – that are responsible for the delivery of public policy work
closely together and do not duplicate each other’s work or allow gaps in services.
Coordination is often understood in both ‘horizontal’ terms i.e. how to improve
coordination between departments and programmes, as well as ‘vertical’ terms i.e.
how to connect central agencies with local institutions and non-state actors. There
is also interest in the multiple levels at which governance is needed to deal with the
diverse challenges of climate change (Liesbet and Gary, 2003), the effective
delivery of climate finance can also be considered on these multiple levels.
Improving coordination is an age-old problem: as a seminal study on policy
implementation from 1973 noted, ‘no phrase expresses as frequent a complaint
about the … bureaucracy as does “lack of coordination.” No suggestion for reform
is more common than “what we need is more coordination”’ (Pressman and
Wildavsky, 1973).
Three major concepts are often referenced to shape understandings of coordination
in this multi-level context (Thompson, 1991).
The principle of hierarchy suggests that coordination must be driven
from the top down, with central administration and political leaders
driving ministries and agencies to coordinate closely. Individual
organisations may not have a clear view of what other organisations
are doing (and how it relates to their duties), and may therefore
struggle to forge shared interests with others. Hierarchy, it is argued,
can reduce the transaction costs of coordination.
A second theory posits that coordination results from exchange and
bargaining. Buyers and sellers each have something to gain, but may
enter this exchange with opposing interests. Therefore, processes
related to the allocation of finance (such as budgets) represent a type
of coordination based on exchange.
A final strand of theory focuses on networks. Networks are defined
through patterns of interaction among organisations and individuals
concerned with the same policy issues. Networks depend upon the
interests and commitment of individuals and groups. In some contexts
networks can restrict coordination if they are too insular or exclusive.
Coordination can also be considered in terms of ‘positive’ and ‘negative’
approaches (Scharpf, 1972). Positive coordination seeks proactive engagement of
stakeholders around a shared agenda. While this can help to tackle crosscutting and
‘difficult’ issues such as climate change and associated decisions on finance, it is
rare because it takes time and involves substantial transaction costs, and may be
seen to threaten departmental interests (Fleischer and Hutstedt, 2012). In contrast
negative coordination (which often dominates) includes a lead ministry proposing
options and seeking to set an agenda, while affected departments offer comments or
resistance. Merely setting up an inter-ministerial process to facilitate positive
cooperation does not guarantee success, or build common understandings of the
problem to be tackled (Fleischer and Hutstedt, 2012). Changes in structure,
therefore, do not necessarily change behaviour and it is the incentives to coordinate
climate change that matter. While formal mechanisms for coordination can be
helpful, they need to be complemented in practice with informal techniques of
bargaining and engagement.
Getting it together: 6
3 Institutional arrangements: key findings from the five case-study countries
Governance of the domestic response to climate change affects the role that finance
can play in supporting this response. In each of the five case study countries, the
major institutional arrangements around climate finance have followed the creation
or adoption of a domestic climate change strategy, policy or legislation. They have
emerged either with a goal of supporting more climate compatible national
development policies, often with an additional objective of strengthening national
preparedness to access and use international climate finance.
The mandate and purpose of domestic institutional arrangements around climate
finance can be characterised as:
Championing climate change as a priority in the context of wider
investment or development choices, and bringing other stakeholders
on board in support of this priority (more likely if empowered by the
wider climate-governance context)
Forming a common vision on the action that must be taken to address
climate change and associated policy priorities through tools such as a
Presidential decree, legislation or national policy document (often
necessary to facilitate a stronger climate-governance framework)
Table 1 and 2 summarise the institutional arrangements in place in all five
countries, and their key attributes. In Colombia, Indonesia, and Zambia efforts to
support ‘positive’ coordination around finance and investment are underway
through the creation of new institutions. Platforms or institutions that bring together
representatives of different government and stakeholder groups have been
established to support implementation of the national response to climate change.
Substantial effort has been invested in Colombia and Zambia to put in place
systems to share information and understandings of issues related to domestic
implementation, as well as engagement with international climate financing and
associated policy processes. These often have direct or indirect links to institutions
that develop climate-related policy or legislation. Decisions around what to
prioritise, and how to support execution through finance, have been central in these
fora. In this context, the role of finance in enabling implementation is an important
consideration. International organisations have provided significant support for
these arrangements, as we discuss below.
In India and the UK, by contrast, there does not yet seem to be much evidence of
‘positive’ coordination around finance. This does not necessarily suggest ‘negative’
Getting it together: 7
coordination, however, in the sense of active resistance: rather, in the absence of a
formal coordination mechanism, informal networks and exchanges between various
actors have been prevalent. While arrangements for coordination may be less
elaborate, substantial action is getting underway in collaboration with private sector
actors. In the Indian case, sub-national institutions (primarily state governments)
are playing a major role. The National Action Plan on Climate Change (NAPCC)
has catalysed a substantial effort at state level to develop and cost climate-change
action plans. While some international climate finance is targeting local
government institutions, formal engagement of sub-national government is nascent
and a recognised frontier for future work. Greater opportunities for structured
engagement, or an exchange of perspectives on opportunities to scale up or expand
action, might be highly beneficial in this context. In both India and the UK, national
climate priorities have prompted the establishment of new initiatives to incentivise
investment in energy efficiency and renewable energy, under the broader ambit of
efforts to meet and address greenhouse gas emissions reduction and ensuring
energy security.
Key findings
In all of the countries reviewed, a vast range of institutions (within and outside of
government) play an important role in implementing efforts to respond to climate
change, and thereby in accessing and using finance for action. While formal
structures for engagement may be helpful, in practice informal working
relationships and collaborations have proven vital. Strong leadership by technically
respected individuals, and informal collaboration is beginning to create a more
solid foundation for coordination.
Domestic financial markets, levels of public debt and the ability to access
international capital markets to raise finance vary substantially across these
countries. These factors shape options for a national climate finance response. In
most of the case study countries, with the exception of Zambia1, one observes an
increasing role for national development banks in the domestic climate response
So far, efforts to allocate domestic public finance on the basis of agency or
institutional contributions to a national climate-change response are nascent. The
adoption of performance-based budgeting approaches in the context of
implementation of the RAN GRK in Indonesia may begin to create such a
framework. But even in the UK, where government departments have been subject
to carbon budgets, they have not been given financial support from the national
treasury to achieve those budgets.
1 The Development Bank of Zambia does not appear to be active on matters of climate finance.
Congress: National System on Climate Change (to be adopted)
The GEF
Clean Technolgy Fund
Green Climate Fund
Adaptation Fund
Sectoral Ministries
FCPF
GovernmentInternational funds Private sector
Non-governmental actors
National NGOs
International NGOs
Research institutions
Financial Institutions (Green Protocol, Bancolombia)
Industries
Development Finance Institutions
State governments
MADS Department of
National Planning
Hacienda Ministry of Foreign Affairs
Bancoledex Fineter National Adaptation Fund
Regional Autonomous Corporations
Urban Environmental Authorities
Colombia
Development Finance Institutions
NABARD SIDBI
Prime Minister’s Council on Climate ChangeNational Action Plan on Climate Change
The GEF
Clean Technolgy Fund
Green Climate Fund
Adaptation Fund
Sectoral / Nodal Ministries
GovernmentInternational funds Private sector
Non-governmental actors
Indian Renewable EnergyDevelopment Agency
Private businesses
National NGOs and civil society
International organizations/MDBs
International donors
Public and private sector banks
Government-backed NBFCs
State governments
MoEFMinistry
of Finance
Climate Change Finance Unit
National Clean Energy Fund
State Action Plans on Climate Change
National Clean DevelopmentMechanism Authority
India
Table 1: Institutional arrangements around climate finance in the five case-study countries
Mitigation and adaptation guidelines (RAN GRK and RAN API)
The GEF
Climate Investment Funds
Other bilaterals
Adaptation Fund
Official coordinating bodies
Norway Bilateral REDD+ �nance
Executive GovermentInternational actors Private sector
National NGOsCivil Society Forum for Climate Justice
Indonesia Climate Change Alliance Indonesia Climate Action Network
Civil society andresearch institutes
Research institutionsCIFORICRAF
Technical universities
International NGOs /ResearchersCPI Indonesia
WRIWWF
Financing institutions
Industries (palm oil, paper, timber, energy, mining and extractives)
Relevant government ministries
Indonesian Climate Change Trust Fund
Subnational governmentBappedas
State-owned enterprises Pertamina, PLN
National Banks Bank of Indonesia
Bank MandiriIndonesia Green Investment Fund
DNPI UKP4
Finance Forests
MoA Bappenas
Indonesia
Government
The Green Investment Bank
Sectoral ministriesFinancing institutions
investor groups
Treasury
Local government
Private sector and non-governmental actors
National NGOs
Think tanks
Research institutions
Regulated entities, industry associations
UK ParliamentNational Climate Change Act
National Climate Change Committee
EU C
limat
e Po
licy
DECC DEFRA BIS Friends of the Earth
WWF Greenpeace
Chatham house
E3G
UK Energy Research Council
IPPR
United Kingdom
PPCR
President of Zambia
Sectoral ministries
Cabinet
Sub-national governments
Private sector
NGOs and civil society
Parliament(National Climate Change Stategy to be adopted)
MNLREP Ministry ofFinance
The GEF
LDCF
International funds
Zambia
Getting it together: 10
Table 2: Key attributes of institutional arrangements in the five case study countries
Colombia India Indonesia UK Zambia
Climate governance context
A climate change law is being pursued, aiming to institutionalise the national climate system (SISCLIMA) with an inter-ministerial body led by DNP, and prompt national budget expenditure on mitigation and adaptation.
NAPCC has triggered action at national and state level, complemented with policy and regulatory measures
The RAN GRK (Mitigation Plan) and RAN API (Adaptation Plan) have been adopted as national and regional plans for meeting emission reduction goals and supporting adaptation.
The National Climate Change Act sets out climate change response goals, in the context of wider EU climate change commitments
Climate change is addressed in the national development strategy; a climate change strategy and green growth policy are to be adopted by Parliament.
Key Roles The anticipated SISCLIMA has a finance sub-committee with the role of coordinating and supporting climate related financial resources. Representatives of the Ministries of, Environment, Foreign Affairs, Treasury and others are already engaged, and meet regularly since 2013. Engagement with the national budget system needs strengthening.
Action on finance highly decentralized. Ministry of Environment (MoEF) (focal point on international engagement) Ministry of Finance (MoF), which houses a dedicated Climate Change Finance Unit (CCFU), are key actors. Substantial implementation at state level.
Multiple organisations have a mandate to act. President-backed DNPI leads on international policy and inter-agency dialogue. UKP4 is coordinating REDD+. BAPPENAS has developed plans, and hosts ICCTF as a channel to coordinate international finance. Ministry of Finance now engaged on climate options, but operational links to public expenditure can be strengthened.
The National Climate Change Committee oversees adherence with carbon budgets, and guides adaptation. DECC engages energy regulators and industry on mitigation. DEFRA leads on environmental policy and adaptation. UK treasury announced plans to incorporate climate into investment decisions in 2010.
The Interim Inter- Ministerial Secretariat for Climate Change (IIMSCC) comprises representatives from ministries of Environment, Finance and Agriculture. It replaces the Climate Change Facilitation Unit in Ministry of Environment. Ministry of Finance has played a lead role. It is to be replaced with a National Council on Climate and Development.
Interaction with local government
Strong role for city and regional level actions. There are sub-national environmental authorities that could play a greater role in the arrangements.
Many state climate plans, triggered by the promise of additional funding. Many internationally funded projects now interface with state governments.
Local governments empowered to act on issues of investment and implementation of projects. BAPPENAS has yet to actively engage local planning units (BAPPEDAS); recognised as a frontier for further effort.
Important delivery agent for emissions reduction and adaptation. English local government used to have indicators for climate change, but these were dropped in 2010. Severe budget cuts and revenue restrictions, limit capacity to act.
Several climate programs directly engage local government units. There is potential for a strengthened role for Ministry of Local Government.
Getting it together: 11
Colombia India Indonesia UK Zambia
Influence over the national financial system
The finance committee is to engage a range of national development banks including Bancoldex, FINAGRO, and others. Nine private financial institutions, two development banks and the Colombian government have signed a Green Protocol in 2012 to promote sustainable investment.
NABARD (rural development), SIDBI (Small Industries) and other development banks increasingly engaged, as well as non-banking finance companies (IREDA). Opportunities for more structured engagement could be beneficial.
Bank of Indonesia supporting green investment. Bank of Mandiri developing low carbon credit lines, and serves as trustee for ICCTF. Ministry of Finance’s Investment corporation Pusat Investasi Pemerintah is exploring low-carbon investment. The Indonesian Banking Authority developing green banking regulations.
Treasury was relatively slow to announce guidelines on how to incorporate climate into investment choices. A Green Investment Bank (GIB) was created to provide private actors finance for low carbon and green investment. Capitalisation of the Bank has been modest however, and its risk tolerance limited.
The domestic financial system is relatively small; to date there has been limited engagement of the Zambian Development Bank or other domestic banks on climate issues.
Private sector
Relatively limited systems in place to engage businesses and industry to date in the finance committee.
Mostly evidenced in the renewable energy sector, with financing from a range of private sources.
National banks have begun to galvanize private investment, yet the role of the private sector in change response is limited.
GIB aims to unlock potential private investment in low carbon and green investment; direct operational links through investment chain. DECC consults with industry groups in developing climate policies and regulations.
Several studies on the potential for private sector engagement have been completed, but in practice engagement is limited
Civil society and NGOs
Domestic civil society capacity on climate is perceived to be relatively weak. To date, there is no formal civil society participation on the Finance Committee.
No formal platform for engaging such actors. Representatives from leadings research institutions or think tanks engaged as expert advisors in the design and execution of climate change responses.
DNPI and ICCTF have set up platforms to engage representatives from civil society groups and national and international research institutions.
National Climate Change Committee includes academics
IISCCM engages the Zambian Climate Change Network (ZCCN) – a coalition of NGOs and private sector actors – for civil society inputs.
Role of Parliament/ Legislature
Recognised need for Congress to play a more active role on climate, including by institutionalising the proposed SISCLIMA.
Limited. Most institutional arrangements have developed following initial momentum provided by the Prime Minister’s Office, led by key nodal ministries.
Plans mostly adopted through Presidential decree, little role of Parliament.
Parliament plays central role in oversight of national climate policy, coordination efforts, including those aimed at investment.
Parliamentary action needed to adopt the National Climate Change Policy and Green Growth Strategy, which will institutionalise the IIMSCC.
Getting it together: 12
The role of the private sector
The structure of the institutions analysed suggests that private-sector actors have
not always been included in decision-making bodies. In most countries there is
growing private sector participation in climate-related activities and it is clear that
there is an important opportunity to unlock the potential of private players in
general, so that private financial activity is linked to national priorities and
processes. Targeted approaches are needed to understand private-sector interests
and practical options to reflect the sector’s priorities with respect to low carbon and
climate-resilient investment opportunities. This is not straightforward, however: in
countries such as the UK where such efforts have been made in a concerted way,
space is often largely occupied by private interests with a stake in business as usual
(oil gas, fossil fuels). There is also a need to recognise the expectations of the
private sector from the GCF and enable its engagement with the Fund. In general,
institutions appear to have struggled to put in place appropriate fora and
frameworks to this end. In most countries, however, there is recognition of the
importance of adopting better approaches to engagement, and strong interest in
finding appropriate ways forward.
Consulting expert groups, civil society, and the public
Civil-society organisations (CSOs) are playing a significant role in all of the
institutional arrangements considered in this study. In many cases, they have direct
representation on councils or bodies. In India, for example, representatives of think
tanks and NGOs have also been engaged in the design and execution of national
climate change responses, often as expert advisors. In the UK, the National Climate
Change Committee includes respected academic experts as well as former
politicians and business leaders. In Indonesia, the Government draws upon the
trusted expertise of several civil-society groups and networks and DNPI has set up
platforms to engage civil society and think tanks. Through the ICCTF, an elaborate
structure has been devised to include representatives of academic organisations and
civil-society networks in the governance of the Fund. Similarly, in Zambia the
IIMSCC engages the ZCCN to provide grassroots and civil-society inputs.
But there are limits to the perspectives that can be engaged through direct
representation. In turn, the legitimacy of the selection of civil-society
representatives on such bodies may be contested. There has, in general, been a need
to complement such ‘direct’ representation with efforts to create opportunities for
more broad-based consultation and input. Such measures have often been tailored
to particular issues that institutions are trying to tackle. In Indonesia, for example,
stakeholders have been mapped and concerted efforts have been made to engage
them in the context of strengthening stakeholder engagement in efforts to reduce
emissions from deforestation and degradation, in partnership with the National
Forestry Council (DKN). General efforts to share information and report on the
progress of these institutions can increase the understanding of progress by a wider
range of stakeholders.
In several cases, notably in India and the UK, formal processes of participation are
routinely included in the finalisation of proposals and investment choices; but these
opportunities often come quite late in the game. Access for some groups, however,
is an issue, as is transparency. Civil society groups may perceive that large,
influential businesses (often carbon intensive) have greater access to these
processes, which may dissuade engagement. Informal and broad-based engagement
earlier in the process can often be more influential.
Getting it together: 13
Parliamentary oversight
The extent to which parliaments and legislatures have engaged in climate and
finance related initiatives varies substantially. In the UK, the legislative context for
action means that Parliament plays a central role in oversight of the national
climate-change and the national coordination effort, including efforts to realise
investment.2 In the four other countries studies, similar efforts involve more limited
parliamentary engagement, although a more active role for legislatures would
presumably ensue in Colombia and Zambia if proposed measures that would
institutionalise present arrangements are adopted. In Indonesia, plans and policies
have been adopted by Presidential Decree, rather than through legislative processes.
While such an approach has been expedient, the lack of legislative certainty raises
questions about continuity in the face of the country’s political changes and
electoral cycles. The influence and effectiveness of new institutions or
arrangements is inextricably linked to the perceived legitimacy and credibility of its
leadership, as well as its formal legal mandate or political character.
Interactions with international funds and donors
The question of how international funds engage with national actors has been an
issue of particular interest for the international community as it seeks to strengthen
ownership and stakeholder engagement of multilateral climate funds. Different
funds have engaged different actors at country level, and there is a recognised need
for contributors to strengthen coordination with each other and for the use of
emerging national systems to monitor international support received. More
generally, support from international institutions has shaped the origins and
trajectories of institutions involved in the domestic climate finance response. In all
countries these arrangements have their roots in national efforts to respond to
climate change as a global policy agenda. But in three of the countries reviewed –
Colombia, Indonesia and Zambia – international institutions have supported the
design and operationalisation of these arrangements.
Steering committees that seek to engage stakeholders around the priorities of the
Global Environment Facility (GEF) and Adaptation Fund (AF) have been created in
many countries. These fora and processes have value in terms of creating a space
for deliberation and reflection over the role of the International Fund in the
domestic context. They have also served to enhance the legitimacy of international
fund programming in country. However, they have often been somewhat distanced
from the heart of the institutional arrangements for investment in solutions to
climate change as described in Table 3. Their impact and traction has been
debateable.
The World Bank’s Climate Investment Funds (CIFs) are observed to engage key
actors that lead on economic planning and investment, investment notably
ministries of finance. But the extent to which they have engaged deeply with
national needs and priorities has been mixed. Ministries of finance have often been
more inclined to use available climate finance to support pre-existing investment
priorities, particularly for infrastructure, than to engage in a more in-depth
exploration of opportunities to optimise mitigation, and address vulnerabilities. In
many cases, stakeholder engagement beyond government has been weak. The Pilot
Programme on Climate Resilience (PPCR) experience in Zambia, however, appears
to have deliberately supported an inclusive programming approach.
2 This has also been observed in the case of countries such as Germany, where there is negative coordination at a
departmental level but Parliament has played a direct role in approving policies and programmes to invest in
climate-change mitigation.
Getting it together: 14
Table 3: Structures for interaction with climate funds and donors
Colombia
DNP acts as CIF focal Point
The AF works through MADS. MADS is also the operational focal point for the GEF, while the Ministry of Foreign Affairs serves as the political focal point.
National steering committees made up of focal points and representatives of relevant government ministries, research institutes and implementing agencies have been created for the GEF and the AF. Local government also involved for the AF. The impact of these committees has been unclear.
Colombia’s inter-ministerial arrangements on climate change, however, and the underpinning technical work to design and establish these were supported through a development policy loan from the Inter-American Development Bank.
India
The GEF works through the MoEF as operational focal point, while the MoF is the political focal point.
The MoF has led Indian engagement with the Clean Technology Fund (CTF), which is focused largely on the energy sector. The CCFU has been established within the MoF, which serves as the lead on the international climate finance processes and negotiations.
The MoEF is the Designated Authority, while NABARD has been accredited as an implementing entity. The MoEF has been designated as the National Designated Authority for the GCF.
Indonesia
DNPI has led engagement with international climate policy related processes, and acts as the designated authority for the AF and the CDM
Ministry of Finance is the focal point for the CIFs, in collaboration with the Ministries of Energy for the CTF and forests for the Forest Investment Program (FIP).
The Ministry of Environment is the operational focal point for the GEF. The GEF supports a national stakeholder dialogue that includes a growing range of academic and civil-society stakeholders.
Development policy loans from Japan, France and the World Bank have aimed to strengthen climate-change governance arrangements, including support for BAPPENAS to develop a climate-change response strategy and establish the ICCTF. To date, very little international finance has been channelled through the ICCTF.
Zambia
The Ministry of Environment is the focal point for the GEF and the A
The Ministry of Finance leads engagement with the CIFs on the PPCR
Support from UNDP and Norway resulted in climate change being singled out from the wider environmental oversight functions of the Ministry of Environment through a climate-change coordination unit.
Support from the PPCR then allowed the Ministry of Finance to take over these functions through the IIMSCC.
PPCR funding has played a key role in supporting both the interim arrangements and a much more active role for the Ministry of Finance in these processes.
In addition, the approach pursued by global health funds such as the Global Fund
for Aids Tuberculosis and Malaria (GFATM) of working with a key line ministry
and establishing a multi-stakeholder platform for engagement around funding
priorities was perceived to have worked relatively well in most cases. These
platforms and the costs of their operation have been supported by the Funds. While
there were originally concerns that such approaches might result in parallel
structures for decision-making, in the five countries reviewed they appear to have
developed good links to relevant ministries’ own priorities, and created a space for
sustained engagement with stakeholders. Such an approach could offer a model for
efforts to strengthen engagement in the context of international climate funds.
Getting it together: 15
4 Lessons learned: implications for ownership and ways forward
Climate-finance institutions did not appear on a blank slate. Every country has to
build on its existing institutions, its competencies and priorities, and a complex
political context when grappling with the implications of climate change for future
economic trajectories. In several countries there may be a process that results in
mainstreaming (the incorporation of climate and resilience/sustainable development
considerations in key areas) without explicit reference to ‘climate’. In many
countries this may drive investment in activities that deliver mitigation and
resilience outcomes. In all cases, efforts to strengthen coordination around finance
for climate change activities must deal with messy domestic landscapes, where new
priorities and practices need to be adopted by a set of actors that already exist.
Core functions of coordinating institutions
The five case studies completed suggest the following core functions3 of the
institutions involved in the arrangements that support finance for climate change
responses:
Resource mobilisation (from domestic, international, public and private
sources), and creation of a framework for management of fund flows
Identifying the contribution that different stakeholders (ministries, sub-national
government, civil society or the private sector) could make to implementation.
Fostering public engagement on efforts to respond to climate change, and
providing accountability for action
Taking stock of progress made, external developments, and opportunities for
new or further action
Many of the actors involved in these arrangements also take responsibility for
project or concept development and execution
In addition, in the absence of any specific empirical evidence within the case
studies in this regard, we have identified another core function for such
arrangements – they must begin to take on a role in helping to forge agreement on
3 None of the arrangements that we have analysed in this study were designed with these core functions
deliberately in mind. But many have evolved to address many of these functions to varying degrees.
Getting it together: 16
common priorities in this context, including opportunities for available public
finance (whether international or national) to have the maximum impact.
Several countries have created climate funds that are intended to ‘dock’
international or external finance in climate related priorities. In Indonesia, for
example, the ICCTF sought to consolidate international support for the domestic
climate change response agenda. Some developed countries have also created such
financial structures, such as the GIB in the UK. However, these arrangements are
sometimes somewhat removed from the core dynamics of the national investment
strategy, or indeed the national effort to respond to climate change. Similarly,
international funds such as the GEF have sought to create mechanisms to facilitate
coordination with national stakeholders around their programming priorities.
On the other hand, institutions have emerged in many countries that are now
actively involved in efforts to incorporate climate considerations into ‘mainstream’
policy and associated investment decisions and financial frameworks, for example
the climate finance committee in Colombia, or the IIMSCC in Zambia. In some
cases, these arrangements began as donor-supported initiatives, but are now
evolving to play a central role in the domestic climate and development landscape.
Different countries lie at different stages along this continuum, and most of the
countries analysed represent hybrids that exhibit characteristics of both of these
simplified types. Arrangements also evolve over time.
Table 4: Types of institutional arrangements for climate finance
Key features Type: Docking Type: Mainstreaming
Purpose Dedicated entity created to
attract international finance.
No one specialised agency
to attract international
finance.
Resource
mobilisation
Weakly linked to domestic
climate response and
associated investment
decisions.
Buttressed by a larger
legislative or policy context,
and influencing domestic
investment priorities.
Institutional
structure
Clear recipient institution,
with a formal relationship
with myriad agencies.
Overarching coordination
arrangements bringing key
actors on board, backed by
executive, legislative or
presidential structures.
Stakeholder
engagement
and
consultation
Express mandate to
engage stakeholders,
creating substantial
procedural space for other
government agencies and
civil society agencies.
Scope for external
consultation reflects general
national practice (and their
respective strengths and
weaknesses).
The scale of finance available matters
The scale of the finance around which an arrangement is structured can be one
significant factor in whether it supports “mainstreaming” or “docking”. For
example, in many cases inter-agency bodies have been created to make decisions
around programming relatively small volumes of GEF finance; but their traction
Getting it together: 17
and influence with mainstream investment actors (such as ministries of finance,
development banks, and the private sector) has been modest. On the other hand,
while ministries of finance have engaged around them much more substantial sums
of finance available through the CIFs, the extent to which they have engaged other
institutions in programming and implementation decisions has varied significantly.
Express support (and accountability) for “positive coordination” may helpfully
prompt greater interaction and deliberation across stakeholders about priorities. In
the UK, while the GIB’s capitalisation of £3 billion is significant, it is a modest
sum given the scale of the UK’s climate financing challenge, further constrained by
the GIB’s inability to borrow.
How coordination is led, matters as much as who leads it
Ministries of finance, environment, and non-governmental actors all have vital
roles to play in the organograms that seek to capture the arrangements presented in
this report. These arrangements are not always tidy: roles and responsibilities are
evolving. It is often assumed that, consistent with principles of hierarchy, support at
the highest levels of government will simplify coordination. But the five case
studies carried out for this study suggest that operational coordination may be
complex, even when an entity is empowered by the highest level of government.
The seniority, commitment and leadership of civil servants from ministries that
participate in coordination efforts is also a substantial consideration. As noted,
when ministries of finance lead, they may not bring the requisite expertise and
grounding in the requirements of low carbon and climate resilient development;
they have sometimes focused on advancing pre-existing priorities, rather than
grappling with the complexities of changing course. On the other hand, ministries
of environment have often used access to finance as a way to expand their own
capacity and priorities, or struggled to bring those with implementation capacity
into the conversation. Working arrangements that create space for ministries with
responsibility for economic and financial decision-making to partner with
Ministries with requisite expertise and mandate to address climate change and
environmental issues are needed.
Incubating new ideas and fostering broad based action
Institutional arrangements on climate finance foster stakeholder engagement and
coordination to various degrees. Stakeholder engagement and coordination may be
linked, but they are not the same. Engagement may enable diverse input on options
and may foster innovation. In addition, ample opportunities for engagement may
foster debate, or seek to widen the range of perspectives and legitimacy of
individual policy processes, without directly reinforcing coordinated action. Indeed,
the larger the range of stakeholders that an initiative seeks to engage, the more this
can complicate efforts at coordination.
In creating opportunities for diverse stakeholders to input into climate change and
finance-related decision making, however, it may be possible to create new
opportunities for stakeholders to carry their insights and learning from different
fora to each other and advocate for coordination where this is in their interests. In
all five countries, there are a diversity of actors beyond government who are well
placed to advance action on climate change. Frameworks that allow information to
flow to all relevant stakeholders on opportunities, new developments and national
priorities, may be helpful. Furthermore, some elements of constructive competition
and incubation among stakeholders are likely to be necessary to foster innovation
and the effective responses sought on climate change.
Getting it together: 18
Incentives and accountability for coordination and engagement can be strengthened
Over time, in some countries, such working arrangements appear to be emerging:
but they need to be supported by political authorities, and can be incentivised
through access to finance. In practice, incentives to coordinate in the context of
access to international climate finance are often weak. Key actors may see little to
gain from engaging with climate-related processes. Individual institutions may feel
that they will have a better chance of accessing finance on their own than if they
work through a coordinated process.
In theory, however, facilitated coordination in the context of efforts to access
international climate finance that includes an element of exchange or bargaining
could give key actors an incentive to stay at the table. In other words, access to
international finance may be structured to help empower lead agencies to convene
key domestic actors. But taking such action takes time, resources, and dedicated
capacity. Support for such functions has been helpful in operationalising these
arrangements in most countries. To galvanise key stakeholders around such an
approach, however, finance will need to be available on an adequate scale, and
timeline, to make it worth their while to engage.
Recommendations
A sound understanding of the domestic institutional landscape is imperative to avoid further marginalisation of the climate financing processes from domestic climate policy processes and mainstream investment in relevant sectors. Flexibility is essential.
Improved coordination may benefit from:
The availability of adequate funding (whether from domestic or international sources) that creates sufficient incentives for key actors to come together and engage over a reasonable time period
Proactive leadership of the anchor ministry in efforts to bring ministries of environment, finance, local government and national financial institutions together
A robust analysis of stakeholders in the national climate response, their interests and the strengths and weaknesses of existing working arrangements, taking account of relative mandates and resourcing
Accountability to both domestic and international stakeholders for active engagement with the range of relevant stakeholders
Getting it together: 19
References
Ballesteros, A., Nakhooda, S., Werksman, J., and Hurlburt, K. (2010) Power Responsibility
and Accountability: Rethinking the legitimacy of institutions for climate finance.
Washington D.C.: WRI.
Bird, N., Tilley, H., Canales Trujillo, N., Tumushabe, G., Welham, B., and Yanda, P.,
March 2013. Measuring the effectiveness of public climate finance delivery at the
national level. London: Overseas Development Institute. Available at:
http://www.odi.org.uk/publications/7342-measuring-effectiveness-public-climate-
finance-delivery-national-domestic-level
Brown, L., Polycarp, C., Spearman, M. (2013): Within Reach: Strengthening Country
Ownership and Accountability in Accessing Climate Finance. Washington D.C.:
WRI
Christopoulos, S., Horvath, B., and Kull, M. (2012) ‘Advancing the governance of cross-
sectoral policies for sustainable development: a meta governance perspective’.
Public Administration and Development, 323, 305–323.
Ministry of Finance Indonesia and CPI (2014) The Landscape of Climate Finance in
Indonesia. Jakarta: Government of Indonesia and Climate Policy Initiative.
Fleischer, J. and Hustedt, T. (2012) ‘Sectoral Dynamics in Executive Politics: Co-ordinating
Climate Policy in Germany’. In Lodge, M. and Wegrich, K. (eds), Executive Politics
in Times of Crisis. Houndmills, Basingstoke: Palgrave Macmillan, 264-283.
Flanagan, B. and Nakhooda, S. (2014 forthcoming) Coordination of Climate Finance in the
UK. London: Future Climate and Overseas Development Institute.
Jaramillo, M. (2014 forthcoming) Coordination of Climate Finance in Colombia. London:
E3G and Overseas Development Institute.
Jha, V. (2014 forthcoming) Coordination of Climate Finance in India. London: CPR and
Overseas Development Institute.
Liesbet, H., and Gary, M. (2003) ‘Unraveling the Central State, but How? Types of Multi-
level Governance’. American Political Science Review, 97(02), 233–243.
Polycarp et al., 2013 Clifford Polycarp, Louise-Helen Brown and Xing Fu-Bertaux,
Mobilizing Climate Investment: The Role of International Climate Finance in
Creating Readiness for Scaled-Up, Low-Carbon Energy, World Resources Institute,
March 2013. Available at: http://www.wri.org/publication/mobilizing-climate-
investment
Pressman, J. L. and Wildavsky, A. B. (1973) Implementation: How Great Expectations in
Washington Are Dashed in Oakland; Or, Why It's Amazing that Federal Programs
Work at All, This Being a Saga of the Economic Development Administration as
Told by Two Sympathetic Observers Who Seek to Build Morals on a Foundation.
Berkeley CA: University of California Press.
Thompson, G. (ed.) (1991) Markets, Hierarchies and Networks: The Coordination of Social
Life. Milton Keynes: Open University Press.
van Rooij, J. (2014 forthcoming) Coordination of Climate Finance in Zambia. London:
ACFH and Overseas Development Institute.
Getting it together: 20
Annex I: Methodology for country case studies
SECTION I: Mapping the institutions and experience to date a. Climate change in context Key sources of GHG emissions + vulnerability
Brief overview of policies and legislation to address climate change
b. Domestic institutional arrangements for investment related to a climate change response: an overview of the landscape
Which are the key ministries and agencies involved in managing
investments linked to these sectors?
What role do national financial institutions (including development
banks) and potentially central banks play in shaping investment in
these sectors?
What role is public (domestic and international) and private finance
playing in climate activities in country overall?
What is the level and type of engagement of local government and sub
national institutions as relates to these sectors?
What role have civil society organisations and research institutions
been playing on climate change issues and on climate finance
specifically?
SECTION II: Analysing institutional arrangements for climate change and finance at country level
What (if any) institutions/ministries/agencies have been designated or
established to govern the national response to climate change to date,
and channel finance towards climate change related activities?
Who is involved and how (see table 2)
How are efforts at inter-agency coordination funded and staffed?
Getting it together: 21
Mapping Implications
What role do the following actors play?
Ministries / agencies that control investments in key
sectors play (and how)
e.g.
finance / planning
energy
water
environment
agriculture
At what level are they
represented?
What is the form of their
engagement?
What resulting actions are
they taking?
Parastatals e.g. utilities, etc.
Local government
and sub-national
entities
If yes, which ones?
If no, why not?
What are the challenges and
modalities for delivering
finance to local actors?
National financial
institutions –
including
development banks
and (potentially)
central banks
What role is climate playing in
their investment strategies
(short and long term)?
If they are not involved in
climate policy responses, why
not?
Do they have a mandate from
Government to engage?
If yes, what role do they play
in these arrangements?
At what level are they
represented?
How actively engaged are they?
How are they resourced in terms of
number of people?
What is the extent of climate related
activity within their portfolio?
Civil society/ NGOs If involved, which ones, and
what was the selection
process
If not, why have they been left
out / what are the implications
If involved, how have they
engaged?
Are there formal processes for
engagement?
What kinds of inputs have they made?
How are they perceived by other
stakeholders?
Private actors (big
business vs. SMEs?)
If involved: which ones?
What was the selection
process?
If not, why have they been left
out / what are the implications
If involved, how have they
engaged
Are there formal processes?
What kinds of inputs have they made
What kinds of activities or roles are
they taking on as a result?
How are they perceived by other
stakeholders?
Private financial
institutions
What role are private financial
institutions playing in investing
in responses to climate
change within the country so
far?
Have they been involved in
the national climate change
response efforts at all to date?
Are they involved in these
institutional arrangements? If
not, why not?
If involved, then what roles are
these actors playing?
What is the availability of
market data and information?
Who and how is this provided?
International funds and development partners* What role are international finance and international institutions playing
in these institutions?
Getting it together: 22
c. Accessing international climate funds* Which international multilateral climate funds have been accessed so far? For what
purpose? Who has led the engagement with each of these funds?
International fund Accessed (Yes /
No: If yes, how
much money)
What systems /
processes does the
fund use to engage
with national
government?
Mechanisms for
including other
stakeholders (if any)
Key features
Global Environment
Facility
Least Developed
Countries Fund
Adaptation Fund
Climate Investment
Funds
GAVI
GFATM
Other
Sources of Information: Desk review of fund systems and processes with the country; Interviews with key stakeholders
SECTION III: Synthetic analysis of the implications of the arrangements that have been established
Emergence of arrangements
How did these institutions and systems emerge? Where do they derive
their mandate (what is their legal status and political profile)?
Have multiple or parallel processes that direct finance towards
activities that have climate change impacts emerged? If so why? What
are the implications?’
Modalities of working
What roles do these institutions play in overseeing strategy / program
execution and implementation?
How are tensions and challenges navigated in practice?
What opportunities are there for wider stakeholder engagement? How
have these been structured? If these systems are not in place, why and
what are the implications?
What mechanisms are being put in place to strengthen collaborative
working relationships (e.g. information sharing, etc.)
Ways forward
What are the implications of these modalities?
What have we learned from the particular country experience?
ODI is the UK’s leading
independent think tank on
international development and
humanitarian issues.
Our mission is to inspire and
inform policy and practice which
lead to the reduction of poverty,
the alleviation of suffering and the
achievement of sustainable
livelihoods.
We do this by locking together
high-quality applied research,
practical policy advice and policy-
focused dissemination and
debate.
We work with partners in the
public and private sectors, in both
developing and developed
countries.
Readers are encouraged to reproduce
material from ODI Working Papers for
their own publications, as long as they
are not being sold commercially. As
copyright holder, ODI requests due
acknowledgement and a copy of the
publication. For online use, we ask
readers to link to the original resource
on the ODI website. The views
presented in this paper are those of the
author(s) and do not necessarily
represent the views of ODI.
© Overseas Development
Institute 2014. This work is licensed
under a Creative Commons
Attribution-NonCommercial Licence
(CC BY-NC 3.0).
ISSN (online): 1759-2917
ISSN (print): 1759-2909
Cover image: Paul Falardeau, Flickr,
2008
Overseas Development Institute
203 Blackfriars Road
London SE1 8NJ
Tel +44 (0)20 7922 0300
Fax +44 (0)20 7922 0399
Implemented by
This study has been prepared with financial support from GIZ within the framework of the CF Ready Programme on behalf of the Government of the Federal Republic of Germany.